The Minnesota Supreme Court is weighing what information is considered public when the government hires private companies to perform work on its behalf.
At issue is a $79 million reconstruction project for St. Louis County Schools. Milwaukee-based Johnson Controls, hired by the county to oversee the project, hired a subcontractor Hibbing-based Architectural Resources to help complete the job. But when the Timberjay, a local newspaper, sought information about the project, the companies refused to provide it. The newspaper then filed suit to obtain the information.
During oral arguments Monday, attorneys for Johnson Controls said its subcontract with an architectural firm to design new schools and remodel others was not subject to the state's open records law because the agreement wasn't carrying out a government function.
The Minnesota Government Data Practices Act says the government must provide data to the public, and when the government hires a third party to complete its functions, that third party is subject to open records requests. But what is a government function?
"It is something the government has historically done or by statute is responsible to do. If they transfer that, and the notice is in the contract, they will be treated as if they were a government entity," argued Todd Wind, an attorney for Johnson Controls.
Wind said deciding to build schools and deciding what facilities they should have is a government function, but the design and other details is not.
Larry Schmidt, Johnson Controls area general manager, said the company looks forward to the Supreme Court's ruling.
"We took the case to the Supreme Court because we felt it was extremely important not only for government contractors but also for the state of Minnesota," he said. "We do not believe that architectural and engineering services are typical functions performed by a school district."
The Timberjay newspaper cited the Data Practices Act when asking Johnson Controls for a copy of its subcontract with Architectural Resources. The newspaper's attorney, Mark Anfinson, said Johnson Controls' definition makes it difficult for the public to ensure their tax dollars are being well spent.
"Theirs is profoundly narrow," he said of the definition. "Once you go [Johnson Controls'] way or any other more complex and nuanced rule about defining government function, who are the winners and who are the losers? I'll tell you who are the losers. The public for sure."
TRADE SECRETS CITED
But Johnson Controls and the architectural firm, Architectural Resources, argued that subcontract agreements between private companies can contain trade secrets and information they want to keep out of the hands of their competitors.
"There's no stopping point," attorney Steven Lindemann argued on behalf of Architectural Resources. "That's what makes this case so difficult and so concerning to the design and construction community."
The justices had pointed questions for both sides, and it wasn't clear how they would rule. Justice David Stras said he was concerned that if the court interpreted the statute too broadly, it might discourage private companies from working with the government. On the other hand, Chief Justice Lori Gildea said allowing companies to skirt the open records law by subcontracting out the work "might be a recipe for some mischief."
The hiring of subcontractors for major public projects is common, so the Supreme Court's decision could impact what information the public has about how tax money is being spent on everything from the new Minnesota Viking stadium to light rail lines to security and technology services.
HIGH SCHOOL AUDIENCE
Today's case, which was argued before 600 students at Roseville High School, started more than two years ago when the Timberjay asked the St. Louis Schools superintendent for the subcontract. District officials didn't have it and directed the newspaper to Johnson Controls.
Timberjay editor Marshall Helmberger said examining the contract would help the district determine whether it could recover any of the cost overruns the project incurred.
"There were a significant number of architectural problems — things that had to go back and be redone through the change order process because there were designs that were not up to state code," he said. "Unfortunately, this ended up increasing the cost of the project."
Contractors, government agencies, and public records advocates are all watching the case closely.
Attorney Dean Thomson, who has represented the Minnesota Associated General Contractors, said it's clear government officials have to provide certain information under the Minnesota Government Data Practices Act, but he said it's different when a private company holds the information.
"You have a lot of proprietary data that one contractor wouldn't want his competitors to know," he said. "If contractor X has proprietary pricing in his contract, what would prevent contractor Y from filing a data practices act request and saying I want to see all the pricing that contractor X has? We'd get into all sorts of arguments about what has to be produced and what doesn't have to be produced. Currently, we don't have that."
IMPACT ON OPEN RECORDS LAWS
Thomson said if the Supreme Court rules in the newspaper's favor, it would change the way private contractors work with public entities.
"It's a tremendous cost to organize information with the idea that it may need to be produced at a moment's notice," he said. "You'll get less construction for your public dollar because part of that dollar will be spent trying to keep track of documents so they can be produced."
But those who have advocated for open records said the Supreme Court should interpret the Data Practices Act in favor of broad public access. Open records advocate Rich Neumeister said the law allows citizens to ensure tax money is being well spent when government officials aren't scrutinizing a contractors' work.
"The public uses this tool for accountability if public bodies are not going to act to do their due diligence," he said. "I can look at my own facts, I can do my own evaluation and I can make sure that the people who make these kinds of decisions are doing it right."
Attorney John Borger, who has represented media organizations, said the Legislature and other courts have been interpreting the statute in favor of public access for nearly 25 years. Borger acknowledged that contractors working with government agencies are taking part in some activities that the law doesn't cover.
"One of the questions here is, 'What is a public function?' If it's a government function, then the statute says the contractors and subcontractors are operating under the Data Practices Act. If it's not a government function but a proprietary function, then they aren't covered by it," he said.
Lower courts have already ruled that constructing a county jail was considered a government function.
But there's an additional requirement in the law that could prompt the Supreme Court to rule in Johnson Controls' favor. The law says the government must notify the companies it contracts with that it's subject to the Data Practices Act. The St. Louis County school district failed to do that in this case.
Even if the court sides with the Timberjay on the larger issue, Helmberger said he won't be surprised if he has to keep battling for the contract. The Supreme Court could order an administrative judge to determine what parts of the contract can be public.
"Johnson Controls will raise a whole new line of argument on why we shouldn't get the contract, which is that they'll claim it's trade secret," he said.